Financial Problems Can Come From These 5 Well-Meaning Financial Decisions

As you go through life, financial problems will always pop up and often times catch you off-guard. What makes this even more of a challenge is if you do not have any reserve funds to rely on. This is, of course, for those unexpected emergencies such as appliances breaking down at home, to the car needing new batteries, or even when you are given the pink slip in the office.

There are times when problems manifest because of a direct result of your actions. Sending in a late payment on a bill can lead to penalties and fees. Choosing to go over your card limit would also expose you to completely avoidable charges on your bill. On top of these, there can be adverse effects on your credit score.

However, there are times that financial problems will not only surprise you, it can even come from what you thought were sound financial decisions. This is a curveball that can come up and completely ruin your whole game plan. The best thing you can do is to try to learn as much as possible from the experience of other people so you do not make the same mistakes. Here are some of them.

Pursuing higher education

There is no question that pursuing higher education and even post-graduate studies can do a lot for your financial future. Numerous studies have proven that a college degree can open doors for better career advancement compared to high school graduates. There are, of course, exceptions to that rule with some prominent personalities dropping out of school and later on forming big companies.

In that sense, education remains to be a vital component for future success. However, you need to watch closely with how you pursue that dream. This refers to the student loans you might have to take out to pay for the cost of attendance. The sad part is that tuition seems to be increasing year on year which leaves students and families taking out bigger loans. As a result, they graduate with big debt looming over their heads.

This is one of the financial problems you will encounter and the way to address this is to start saving up for college early on. This can be undertaken both by the parents and even the student themselves. It is also helpful to explore all sources of free money. This refers to grants, scholarships, and other sources of money they do not have to pay back. This would drastically lower down the student loan to take out and repay in the future.

Purchasing a car

Gone are the days when you want to buy a car just to show off to family and friends. Though it can still happen at present, the more common reason for buying a car is a need. It can be to get to and from work or even for a business venture that you are starting up. Having a vehicle makes you mobile and gives you the ability to do accomplish more tasks.

This is one of the financial problems you can address by carefully deciding on the type of vehicle that you need. Doing so helps ensure that it not only fits your need, it also fits into your budget. This is a commitment that takes years to pay off and requires timely payments every month. Be sure that you have the ability to pay it back and put in place reminders to give you a heads up on the payment due dates.

Buying a house

This is part of the American dream and a lot of people, especially married couples, aspire to have a house of their own. They envision raising their family in this house building up memories and helping grow a family in love and harmony. This prompts consumers to explore getting a mortgage loan to be able to finance a house.

There is no question that this is one of most expensive acquisitions you could ever make in your life. As such, lenders use more stringent measures to help them ensure they get paid. On the other hand, this could have the lowest interest rates among all your financial obligations. This is due to the fact that it is a secured loan.

That being said, messing up your payments and defaulting on it can prompt lenders to take back the property. This is one of the most challenging financial problems you would ever face. This is so they can sell it to other people and recoup their losses. Not to mention the significant drop in your score. One way to avoid this is to prioritize your mortgage payments and decide on a property that you can afford. Remember that house payments can take as much as 3 decades to pay off.

Getting a new job

The Balance shared in a recent article that there are a lot of people that jump from one job to the other averaging 12 changes in their career. A lot of people are in search of greener pastures and bigger compensation. There are only a few that seems to stick to one employer their whole life. This is not to say that one is better than the other as they each have their own set of pros and cons. It is just that in today’s time, people equate moving around from one company to the other as the best way to hike up their salary.

That being said, there seems to be no downside in choosing to move onto another job. This is especially if you get to enjoy a higher pay. However, there is a saying points out how a rolling stone gathers no moss. If you keep moving around, your pay might go up but you need to remember that loyalty is also a valued commodity in any industry.

If you chance upon a company that suddenly has to start retrenching employees, there is a big chance that new hires could be on the chopping block. Constantly moving around could also confuse you with your 401(k) fund and you could lose money in the process. There are also vesting schedules when it comes to employers matching a 401(k) so moving around could make you lose your right to that free money.

Using different credit cards for specific purposes

This is actually a great idea as you get the chance to compartmentalize your expenses. Each statement would list down your cost for specific items in your budget. However, this opens you up to all sorts of financial problems such as mixing expenses and even payment with one another. This could lead to over payment for some and under payment for others. If you plan to use different credit cards for specific expenses, you need to organized enough to ensure you do not mix one with the other.

There are a number of financial problems that can show up even if you are pursuing well-meaning financial goals in life. The idea is to be prepared and proceed with informed decisions in life with caution.

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